Ember’s response to the draft guidelines for Virtual Power Purchase Agreements in India

Ember provides a response to the Central Electricity Regulatory Commission's (CERC) draft guidelines for Virtual Power Purchase Agreements (VPPAs) in India. While acknowledging the framework as a welcome step for market-based renewables, Ember argues that VPPAs may incentivize 'plain vanilla' solar generation over dispatchable clean power and allow corporations to claim 100% renewable energy usage through accounting workarounds rather than physical decarbonization.

• The CERC's draft framework defines a Virtual Power Purchase Agreement (VPPA) as a "non-tradable bilateral power purchase contract in which the financial settlement is decoupled from the physical delivery of power." These contracts are intended for renewable energy (RE) generators and "designated consumer" categories, which include electricity distribution companies (discoms) and large industrial consumers.
• Ember expresses concern that VPPAs may hinder the transition to dispatchable clean energy by providing a "semi-insured price hedge for plain vanilla solar generators." This could deepen midday solar surpluses and exacerbate grid balancing challenges, as VPPAs currently lack a mandate for storage integration. Ember notes that coal flexibility is already under pressure, with the maximum hourly ramp-down on May 5, 2025, reaching "−5.7% of the day’s peak coal generation (−8.7 GW at 9 AM)", compared to −3.2% in 2019.
• Market prices for solar power have declined significantly, with average market clearing prices between 10 AM and 2 PM in May 2025 dropping to "₹1.46–1.55/kWh", which is nearly 50% lower than 2024 levels and over 70% below the May 2022 average of "around ₹4.40/kWh". Ember argues that VPPAs "artificially insure merchant solar capacity" by offering fixed returns, which may undermine existing merchant capacity and fail to incentivize storage.
• Ember argues that VPPAs may enable "creative green accounting" rather than actual decarbonization. Because corporations can use Renewable Energy Certificates (RECs) to claim 100% renewable energy use without physically consuming renewable power or contributing to grid flexibility, the framework risks "legitimizing suboptimal outcomes." Ember suggests that for VPPAs to be credible, they must be paired with "complementary investments in flexibility, storage, or time-matching."
• India's total installed green energy capacity reached "232 GW" as of the report date, increasing from "75.5 GW in March 2014", with over 100 GW of this growth coming from solar capacity.

APA

Das, D., & Rodrigues, N. (2025). Ember’s response to the draft guidelines for Virtual Power Purchase Agreements in India. Ember. https://ember-energy.org/app/uploads/2025/05/Embers-response-to-the-Virtual-Power-Purchase-Agreement-guidelines-in-India.pdf

Chicago

Das, Duttatreya, and Neshwin Rodrigues. Ember’s response to the draft guidelines for Virtual Power Purchase Agreements in India. Ember, 2025. https://ember-energy.org/app/uploads/2025/05/Embers-response-to-the-Virtual-Power-Purchase-Agreement-guidelines-in-India.pdf.

Wikipedia

{{cite report |last1=Das |first1=Duttatreya |last2=Rodrigues |first2=Neshwin |title=Ember’s response to the draft guidelines for Virtual Power Purchase Agreements in India |publisher=Ember |date=4 June 2025 |url=https://ember-energy.org/app/uploads/2025/05/Embers-response-to-the-Virtual-Power-Purchase-Agreement-guidelines-in-India.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{das2025embers, author = {Das, Duttatreya and Rodrigues, Neshwin}, title = {{Ember’s response to the draft guidelines for Virtual Power Purchase Agreements in India}}, institution = {Ember}, year = {2025}, month = jun, url = {https://ember-energy.org/app/uploads/2025/05/Embers-response-to-the-Virtual-Power-Purchase-Agreement-guidelines-in-India.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }